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Aimed at benefiting more than 18 million students in the U.K., the cloud-based service will allow U.K. colleges and universities to bypass the insecure, sluggish public Internet in favor of its own separate speedy and secure network.

The new arrangement connects the Janet network and Microsoft's Windows Azure datacenter in Dublin, routed through an exchange point in London, cutting out the need for data to travel over the public Internet. This opens up a number of advantages, such as using Azure's platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) offerings.

What this means is students and academics alike can begin to take advantage of the outsourced cloud service for data crunching, storage and other cloud-based IT services over a high bandwidth connection.

The agreement between the software giant and Janet was signed at Goldsmiths, University of London, on Tuesday.

The devil is in the details, however.

Sovereignty, data ownership concerns?

First off, there's the issue of data sovereignty, such as who owns the data and who can access it. The data is transferred to a Dublin-based datacenter, which means it falls under Irish law. The good news is that it remains under wider EU data protection laws, but simply transferring data outside the U.K. throws out yet another complicating factor to the mix over U.K. privacy laws and potentially personally identifiable research data.

But because Azure will remain a service, therefore Microsoft as the data processor, the universities will retain hold of the ownership of the data.

Secondly, those who have already signed research contracts with third-party sponsors may not be allowed to use the Azure service due to the conflicts between U.S. anti-terror and snooping laws and the EU-wide data and privacy laws.

Such issues relating to the U.S. Patriot Act and the Foreign Intelligence Surveillance Act (FISA) have been noted in the European Parliament at numerous points in the past two years. Numerous EU member states have banned Microsoft and Google outsourced IT services citing such fears, as well as major private companies, such as defense giant BAE.

In expanding to the region, Microsoft admitted that data sovereignty is a "legitimate concern" for customers, but customers should nonetheless be wary knowing that as Microsoft remains a U.S.-headquartered company, it is just as subject to U.S. law in Australia as it is at home.